First Budget Post GST Implementation May be Presented on February 1, 2018
The first budget after the implementation of the Goods and Services Tax is expected to be presented by Arun Jaitley, the Finance Minister of India, on February 1, 2018. The start of the Parliament’s budget session may actualise on January 30, 2018, and the joint session of both the Lok Sabha and the Rajya Sabha, will be addressed by Ram Nath Kovind, the President of India. The Union Budget is expected to be presented after the Economic Survey, which details the state of the economy, on January 31, 2018.
The Budget has been presented at the end of February since the colonial times, but the annual accounts were presented on February 1 for the first time in 2017. The reason why Mr Jaitley presented the budget a month in advance was so that proposals would take effect from the start of the financial year. Moreover, the tradition of presenting a separate Railways Budget, which has been done for nearly a century now, was abolished and instead was merged with the general budget.
There will be less than 30 days between the two sessions of parliament if the tentative schedule for the budget session actualises, as the Winter Session that starts on December 15 shall conclude on January 5. The other time in history when the Winter Session extended into January was when the Prime Minister of India was Indira Gandhi, in 1976. However, the budget in those days was presented on February 28 or 29, which meant that the two sessions were always held after at least a month’s gap between them.
Changes in the Upcoming Budget
The General Elections are set to be held in 2019, which means the upcoming Union Budget will be the NDA Government’s last full budget before the elections. Usually, an approval or vote-on-account for necessary government spending for a certain period of time is taken in the year in which the elections are held, and the new government presents a full-fledged budget. For instance, when the vote-on-account of the previous UPA Government was presented by P Chidambaram, the previous Finance Minister of India, in February 2014, the full budget was presented in July 2014 by the new Finance Minister of India, Arun Jaitley.
The 2018-19 Union Budget will be the first budget after the implementation of the Goods and Services Tax. Despite the fact that the biggest tax reform independent India has witnessed, was introduced on July 1, 2017, the practice of tax revenue forecasts under heads such as service tax, central excise and customs duty in addition to direct tax numbers had been followed. However, service tax and excise duty have been subsumed within the Goods and Services Tax, there may be a change in the classification in the 2018-19 Union Budget.
Although there will be a new classification for revenues that are collected from the Goods and Services Tax, which shall be included in the 2018-19 Union Budget, two sets of accounting are expected to be presented for this year – first for the actual accruals between April and June for service tax, customs duty and excise duty, and then for the period between July and March for customs duty and the Goods and Services Tax.
Since the rates charged as Goods and Services Tax are determined by the GST Council which is led by Arun Jaitley, the Union Finance Minister, and consists of representatives from each of the Indian states, there may not be any tax proposals relating to service tax and excise duty levies in the 2018-19 Budget. The Budget is expected to see the presentation of proposals for changes in direct taxes – corporate tax and personal income tax, apart from customs duty. New programmes and schemes of the government are also expected to be presented in the upcoming budget. This will be the fifth successive budget for Arun Jaitley.
Budget Presented Earlier Than Usual
Since the budget will be held earlier than it usually does, the budgeted funds of ministries will be allocated to them from the beginning of the financial year, which provides leeway to government departments, allowing them to spend and giving enough time for companies to adapt to taxation and business plans.
In the past, when the presentation of the budget was done at February’s end, the approval process of the three-stage parliament would be completed by mid-May, which was weeks before the onset of the monsoon season. As a result, spending on projects by government departments would commence only from the end of August or in September after the end of the monsoon season.